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Bailrevoc.with RAB Edits Sep 18 -- FINAL FILED

Bailrevoc.with RAB Edits Sep 18 -- FINAL FILED

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Published by: liz_benjamin6490 on Sep 19, 2012
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U.S. Department of Justice
United States Attorney Eastern District of New York 
TK:RB:CP
271 Cadman Plaza East  Brooklyn, New York 11201
September 18, 2012
To Be Filed Under Seal
The Honorable Frederic BlockUnited States District CourtBrooklyn Federal Courthouse225 Cadman Plaza EastBrooklyn, New York 11201Re:United States v. Pedro Espada, Jr.Cr. No. 10-985 (S-1)(FB)Dear Judge Block:The government writes to inform Your Honor of certainfacts it has recently uncovered suggesting that the defendantPedro Espada, Jr. has, in recent months, continued to improperlysiphon funds from the Soundview Healthcare Network (“Soundview”)and play a role in governing its affairs. While the governmentwill continue to investigate these matters, the evidencedeveloped to date shows that the defendant has violated theconditions of his Pretrial Supervised Release under 18 U.S.C. §3142©. Specifically, there is clear and convincing evidence thatthe defendant has violated a condition of release, to wit: thecondition that he not participate in Soundview’s affairs.Accordingly, the government moves for the revocation of thedefendant's bail and remand, pursuant to 18 U.S.C. § 3148.I.
Statement of Facts
A.BackgroundApproximately four months ago, on May 14, 2012, thedefendant was found guilty, following a jury trial, of fourcounts of stealing money from Soundview, in violation of 18U.S.C. § 666. On June 5, 2012, Your Honor modified thedefendant’s bail conditions to include a new condition: that henot be involved in Soundview’s affairs.In early 2012, the defendant’s son, Alejandro Espada(“Alejandro”), was named Soundview’s Executive Vice President and
 
took over for the defendant as Soundview’s chief executive in thedefendant’s absence.B.The Sale of SoundviewIn the past few weeks, the government has learned thefollowing.In June 2012, Soundview sold its remaining assets tothe Institute for Family Health (“IFH”), a nonprofit healthcarenetwork that is working to open a medical clinic at 731 WhitePlains Road, the location where the now-defunct Soundviewformerly treated patients. According to records that IFH hasprovided, IFH entered into an agreement with Soundview topurchase Soundview’s medical equipment and the right to assumeits lease at 731 White Plains Road for $600,000.Bank and other records show that on June 28, 2012, IFHprovided Soundview with a check for $600,000. That amountrepresented Soundview’s last remaining assets, as its main bankaccounts currently show a negative balance. Immediatelythereafter, the defendant and members of his family drained mostof the $600,000 from Soundview’s account.C.The Espada Family Drains Soundview’s Last AssetsBank records show that on June 29, 2012, one day afterSoundview deposited the $600,000 from IFH, Alejandro obtainedcashier’s checks and distributed over $350,000 of that money tothe following individuals and entities:
Individual/CompanyAmount
Soundview ManagementEnterprises (“SME”)$104,000Pedro Espada, Jr.$40,000Soundview Medical Group$81,500Pedro Gautier Espada$42,045Alejandro Espada$38,000Hafetz, Necheles & Rocco$50,000 The remaining portion of the funds was distributed in muchsmaller increments to various former Soundview employees.2
 
Notably, Soundview owes at least $2 million to innocentcreditors, such as medical supply companies, and approximately $1million to the Internal Revenue Service in payroll taxes.However, no such creditors received any of the $600,000.A further explanation of the circumstances surroundingseveral of the above-mentioned payments are set forth below.1.$104,000 Check to SMESME was the defendant’s private janitorial company thatSoundview paid hundreds of thousands of dollars to clean itsfacilities from 2008 to 2010 and from which the defendantprofited handsomely. At trial, the government presented evidencedemonstrating that SME charged Soundview well over $100,000 morethan it cost SME to clean Soundview’s facilities and pay itsemployees. Notably, SME’s last contract with Soundview ended in2010. Thus, SME has had no business with Soundview forapproximately two years.After Soundview issued the $104,000 check to SME onJune 29, 2012, the defendant took several steps to convert it tocash. First, on July 5, 2012, the defendant withdrew $50,000 incash from SME’s account. Second, on the same day, the defendantused $45,000 from SME’s bank account to purchase a cashier’scheck made out to his wife. Third, the next day, the defendant’swife deposited the cashier’s check into her own bank account andwithdrew the same amount in cash.These transactions appear to be designed to accomplishseveral illicit goals. First, the transactions show that thedefendant is seeking to defeat any future forfeiture andrestitution orders by preventing the government from attachingassets in a known bank account.
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Second, the transactions appear designed to hide thedefendant’s assets from the Court, Pretrial Services and theDepartment of Probation, so that these entities are preventedfrom having an accurate picture of the defendant’s finances.Notably, on July 9, 2012 – within days of these transactions –the defendant’s CJA-appointed counsel in the Southern District ofNew York reported, during a status conference before the Hon.William H. Pauley, the U.S. District Judge overseeing thedefendant’s criminal case in that district, that the defendantAt present, records show that the defendant has no more
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than a few thousand dollars maintained in any single bankaccount.2

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